Thursday, December 9, 2010

BS Bernanke doing his thing on 60 Minutes again....

Luckily for me, I was enjoying a delicious crab dinner in Maryland during Ben Bernanke's interview on 60 minutes this past Sunday night, so I missed it.
John Stewart supplied the exact same cynicism that I would have if I had watched it- this is very funny:
  • When the Fed creates dollars to bail out the banks, that is printing money (from 2009 interview)
  • When the Fed creates dollars to buy Treasuries in the open market through it's primary dealer, that it not printing money. (from 2010 interview)
So, it goes like this. If the purchase flow is:
Treasury --> open market --> primary dealers --> Fed  
Then the new dollars that bought the treasuries were not "printed". HOWEVER, if the purchase flow goes:
Treasury --> Open Market --> Fed
then the new dollars that bought the treasuries ARE "printed" and that's a no-no...
You have GOT to be kidding me.
The bottom line kids is whenever the Fed issues dollars to credit the account of ANYONE without adjusting the equivalnet amount by marking down or selling assets on the other side of the balance sheet, then the Fed is printing money- Period; and creating new dollars depreciates the value of all existing dollars and the result is a loss of purchasing power. End of discussion.
I would love to interview Ben Bernanke. 
There is only one safe place for your savings for the immediate future- and that is hard assets that can not be created without work. If it can be denominated in anything that can be created without work, then it will depreciate in value.